Why the Model Y will be Tesla’s most important car

Tesla on Thursday is expected to unveil the Model Y, its most important car yet.

Tesla expects the electric SUV to become its best-selling vehicle. Car buyers in the United States are increasingly choosing SUVs over sedans.

Tesla (TSLA) already makes the Model X SUV, a luxury model that is often priced at more than $100,000. It only accounted for 15% of Tesla’s sales in the fourth quarter, but it did edge out sales of the Model S, it’s luxury sedan.

The Model Y is expected to be priced for the mass market. But getting to that affordable price could take time. Tesla has just begun taking orders for the long-promised $35,000 version of the Model 3, almost three years after it was unveiled.

The Model Y will soon have a lot more competition from other automakers, which are making their own electric SUVs. That raises the stakes for Tesla’s launch because it risks losing its grip on the electric car market.

One of reason electric vehicles haven’t taken off is because most of them have been available only in sedan models, said Michelle Krebs, senior analyst for AutoTrader. Electric vehicles represent just over 1% of new car sales in the United States.

“It really hasn’t been in a body style that people are buying,” she said. “The only one out there now is the Model X. But that won’t be the case for long.”

CEO Elon Musk is clearly counting on big things for the Model Y.

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